Money

UK GDP ever so slightly edged up in February, growing 0.4 per cent according to today’s update from the Office for National Statistics. No surprises here: there were no changes to lockdown restrictions between January and February, which gave the economy little room for manoeuvre. The ONS has revised January’s GDP fall from 2.9 to 2.2 per cent: still a contraction, but another good indicator that businesses have significantly adapted to lockdown rules, which has meant that this winter’s lockdown didn’t plunge GDP down to record levels as it did last spring. Still, February serves as another reminder that – despite spectacular market innovation – there is a ceiling on

The market emphatically endorsed my negative opinion of the Deliveroo share offer, which bombed from its offer price of 390p to close at 282p before Easter. The biggest London IPO since the commodity giant Glencore went public in 2011 now also stands as the most embarrassing flop in living City memory. Goldman Sachs and JP Morgan Cazenove, the deal’s bookrunners, must have known it was in jeopardy when they knocked more than a billion off their first indicative valuation after UK institutional investors lined up to say they wouldn’t touch it. But 70,000 Deliveroo app users, having failed to read that signal, bought into the ‘community offer’ — and have

The message from the budget last month was clear – at some point in the future the Chancellor is going to raise taxes. A lot. The announced increase in corporation tax rate from 19 per cent to 25 per cent from 2023 is a sign of things to come. And yet the overall tax take has already increased substantially since the Thatcher lows of the late 1980s. The amount of tax the government raises is already equivalent to 35 per cent of GDP, the highest level since 1969. And prior that that, as the chart above shows, you have to go back to 1948/9 for years when the tax take was this

‘The reason we have the vaccine success is because of capitalism — because of greed, my friends.’ So Boris Johnson told his backbenchers last week, though he immediately muttered ‘Forget I said that’ while aides tried to explain it as a joke on the chief whip, who was munching a cheese and pickle sandwich at the time. Whatever, the PM’s gaffe makes a neat text for a short Easter sermon. The fact is that ‘capitalism’ — the mustering of vast private-sector resources to bring lab-tested potions to mass production in record time — has indeed delivered a triumph, in combination with university science, a smart Whitehall taskforce, military logistics and

To most of us, cryptocurrencies remain an esoteric world, beloved by nerds and incomprehensible to the rest of us. Does Visa’s announcement this week that it will now process payments directly in a cryptocurrency called USDCoin change that, and hasten us to a day when we will all have cryptocurrency accounts which we use to do our day-to-day shopping? You don’t need to understand the mathematics of cryptocurrencies and blockchain to work out that the prospect of shopping with crypto is rather concerning for two reasons. Firstly, cryptocurrencies are an unregulated Wild West. While the pound in your pocket is backed by the Bank of England and the pound in

Just as the auto industry embraces the electric future I wrote about last month, it hits a new crisis: a shortage of the microchips that power everything under the bonnet. As a parable of globalisation’s perils, this one has all the ingredients from trade war to fire, drought and Covid pestilence. When car production slumped last year, chip-makers switched to meet booming demand for parts for smartphones, tablets and laptops. Now car factories are keen to raise output again, but there aren’t enough chips to go round. The leading source, Taiwan, is entangled in US-China tensions and its factories are afflicted by water shortages; other plants have been stricken by

‘Unloved’ is an adjective often applied to British shares in recent years. A more appropriate description might be ‘abandoned, with half a dozen kids and the rent unpaid’. Since referendum day in June 2016 the FTSE100 index has grown by 10 per cent. Over the same period the Hang Seng is up 42 per cent, the DAX up 44 per cent, the Dow Jones up 88 per cent and the Nasdaq up 184 per cent. The FTSE100’s longstanding underperformance goes back far further, though, than that. It is still lower than it was on the last day of the last century – although there has been substantial growth in the midcap stocks which make up

The centre of London currently looks as though the apocalypse has struck. Streets, bars and restaurants lie empty and shops are boarded up. It’s hard to picture the bustling capital so familiar to many of us a year ago and it’s understandable that this dead city centre has prompted many home owners to up sticks and leave. But reinvention is sure to occur. And when it does, you’ll want to be a part of it. Whilst interest in rural properties has surged and rents in London are falling, prices in the capital are yet to reflect the sheer volume of people moving out. Those who can hold on to their London property are doing so in

Historians of unforeseen crises talk about ‘chaos theory’ and the ‘butterfly effect’, in which a small perturbation far away — the flapping of a butterfly’s wings in Australia, as it were — have impacts across much larger connected systems. More usually applied to weather events, the theory had its 2008 moment when the collapse of AIG, a US insurer whose name meant little over here, threatened to cripple so many banks that, without immediate bailouts, our high street ATMs (we were told) might have been switched off there and then. Let’s hope Greensill Capital, a little-known ‘shadow bank’ created by former Queensland sugar farmer Lex Greensill, doesn’t turn out to

Should the Bank of England be jacking up interest rates whenever the housing market starts to run away with itself? That is what the Reserve Bank of New Zealand has in effect just been asked to do by Jacinda Ardern’s government: to take into account a ‘sustainable housing market’ when fixing its monetary policy. If such a policy were to be adopted in Britain it would have profound consequences for homebuyers and investors – threatening to cut off the supply of cheap loans whenever prices started getting frothy. It is over two decades since the Bank of England was set the task of tracking an inflation target – increasing interest

This column generally takes a sceptical view of financial novelties and gimmicks. So my antennae have twitched in recent days at frequent mentions of Spacs, or ‘Special Purpose Acquisition Companies’, which are the latest plaything of Wall Street and could be about to go large over here. Also known as a ‘blank cheque’ company, a Spac is a stockmarket-listed cash shell that raises money with a view to merging with a real — usually hi-tech, often relatively early-stage — business seeking a fast route to listed status. Hundreds of Spacs have been created in the US since the craze began last year, many with celebrity names — sports stars, astronauts,

Punters have been warning about the over-valuation of tech stocks for so long that great fortunes have been made in the interim. Then again, anyone old enough to remember back 20 years will know that tech stocks are not invincible – they can indeed crash. So is the wobble in tech stocks since the middle of February just that – a wobble – or is it the beginning of something bigger? Has the end of the party finally arrived? Since the middle of February the NASDAQ – the US exchange for tech stocks – has slid by just over eight per cent. Some of the big players – the ‘FAANGs’ —

Buy when there is gunfire on the streets, goes the old adage. But could this be a case of the right time to buy being when there is, well, hardly anything happening on the streets? Few investments have been as hard hit by Covid-19 as commercial property in central London. As shops and restaurants have been closed, and office staff made to work from home, landlords have struggled to collect their rent. In the six months to September, for example, Shaftesbury, which owns 600 buildings in the West End including 1.9 million square foot of retail and office space, managed to collect only 41 per cent of what was due,

There is one certainty for every Budget day: that the chancellor will dream up some novel scheme to prop up the housing market. Rishi Sunak’s idea of providing state guarantees for 95 per cent mortgages taken out by first time buyers isn’t, however, that new. It is really just a reheated version of one branch of the Help to Buy scheme run by George Osborne between 2013 and 2016. This is the story of the property market over the past quarter century: in the long property boom of the late 1990s and early 2000s banks got themselves into huge trouble by advancing high loan-to-value mortgages. They did so in two ways: